Clariant wins on ethylene, stock soars (+16%) (cross-border guide)

Context

In a nutshell

• Clariant has won a lawsuit against Shell for a claim of one billion euros. - The court found the evidence provided by Shell unreliable and implausible. - The ruling strengthens Clariant's position, according to which it was not possible to demonstrate any damage attributable to the company's behaviour.

Key facts

• What: Clariant has won a lawsuit against Shell. - When: The judgment was issued by a district court in Amsterdam. - Where: Amsterdam. - Who: Clariant. - Amount: Not specified.

Clariant has won a lawsuit against Shell for a claim of one billion euros. The court found the evidence provided by Shell unreliable and implausible. The ruling reinforces Clariant's position that no harm attributable to the company's behaviour could be demonstrated.

Cause Details

The lawsuit was filed by Clariant against Shell for a claim of one billion euros. The Swiss company claimed that Shell had not complied with trade agreements relating to the production of ethylene, a chemical compound used in the production of plastics and other products. The court found the evidence provided by Shell unreliable and implausible, stating that there is no concrete evidence demonstrating harm attributable to the company's behaviour.

Impact on the bag

The ruling had a positive impact

Operational details

The lawsuit concerned violations of competition law sanctioned by the European Commission in July 2020. The Rhenish group had agreed with three other companies in the sector – the Mexican Orbia as well as the Texans Celanese and Westlake – to buy ethylene, one of the fundamental raw materials of the chemical industry, in order to obtain the lowest possible price. All four companies admitted their role in the cartel in the summer of 2020: Clariant had paid a fine of 156 million euros.

The European Commission has condemned the companies for violating Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits agreements that may harm competition. The fine of 156 million euros paid by Clariant represents about 10% of its annual revenue, which in 2020 was 1.6 billion euros. This amount is considerable, but not exorbitant considering that the company has an annual turnover of €6.3 billion.

The European Commission's decision had a significant impact on Clariant's actions. After the news, the company's shares rose 16% on the stock market, reaching a new all-time high. This increase is due in part to reduced fear of a higher possible fine, but also to investor confidence in Clariant's ability to manage risk and continue to grow in the chemical industry.

The cause also highlighted

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Key points

The Amsterdam judgment could now serve as a guideline for the other proceedings still pending. Meanwhile, the stock market is celebrating: in the afternoon, Clariant shares registered a rise of about 16%, a sign that investors are starting to face less legal risk. Since the beginning of the year, the stock has gained 25%, while the performance over a five-year period remains negative, at 53%.

The ruling issued by the Court of Appeal in Amsterdam was considered positive for the Swiss company, which can now continue to work without the concerns related to the case. Clariant is one of the leading European chemical companies, based in Muttenz, in the canton of Basel-Country. Its ethylene production is one of the most important in Europe, and the company has invested heavily in new technologies to reduce the environmental impact of its production.

The Amsterdam ruling could now serve as guidance for other proceedings still pending, including an ongoing case at the Zurich Court of Appeal, which concerns Clariant's liability for ethylene production in Switzerland. The Court of Justice of the European Union (CJEU) ruled in 2019 that chemical companies must be responsible for the environmental impacts of their activities, even if they occur in third countries.

The stock market celebrates the victory of Clariant, with the shares registering a rise of about 16% in

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Source: swissinfo.ch